Why Use a Recruitment Agency: Evaluating the Pros and Cons

<div class="grey-callout"><h2>In This Guide You'll Learn</h2><p><ul><li>Why you should be cautious about using recruitment agencies.</li><li>When to use one.</li><li>My tips for making the most effective use of recruitment agencies.</li></ul></p></div>

Recruitment agencies connect jobseekers to employers, sometimes speculatively, earning a fee for every successful introduction, which is normally a percentage of the salary offered to the person hired.

Don't Use Recruitment Agencies Unless You Have To

It’s best not to treat recruitment agencies as your first port of call. They don’t have specific intelligence about jobseekers known only to them, and they do have some definite downsides.

There a few situations where agencies can be of help, however:

• If you urgently need to fill a vacancy. Agencies are constantly being sent new CVs, so they may be able to send you someone double quick.
• When you’re trying to fill a sensitive or confidential role.
• When you’re seeking someone for an unusual role or entering an international market.
• In tricky situations where you might need to cover yourself, using a well-known agency can help you pass on the blame if things don’t work out.

Ultimately, recruitment agencies want to sell. Having worked in the industry, I’ve seen some of their sales tactics in operation – not all of them particularly honourable! Agencies often charge a lot and you might find yourself paying through the nose for bad service. If you do want to hire an agency, proceed with caution and with both eyes open! Here are some health warnings that you should take on board if you want to go down this route.

Competition for Fees can Lead to Shoddy Service

• Recruitment agencies offer a “contingency service” – only charging employers a fee when they find them a new employee – which creates an incentive for employers to use many agencies at the same time. This in turn encourages agencies to send applicants as quickly as possible so that they’re not beaten to the fee by a competing agency. The result is that agencies don’t necessarily screen applicants very rigorously and you might end up seeing a string of unsuitable people.
• Also, because it's typical to use multiple agencies they could be promoting your job to the same jobseekers, even to those for whom it isn’t the best fit, which could damage your reputation.

Guarantees Only Give You Partial Protection

• If an employee who you hired through a recruitment agency leaves, then you may qualify for a refund. The snag is that this normally applies only if they leave within ten weeks or so after taking up the job. That’s usually not long enough to see if a new member of staff is going to work out.
• Under a “refund guarantee” the employer gets a partial refund of agency fees. Cash refunds are best. Sometimes, refunds are given as a credit note that expires after year, which means that you have to go back to the same agency even if you weren’t happy with them.
• With a “replacement guarantee”, the agency sends you someone else if your new employee leaves. It could take a while for them to find you a replacement and you don’t know if that person is going to be a particularly great fit, so refund guarantees are the better option.

My Tips for Working Well with Recruitment Agencies

Here are my guidelines for getting the most out of your relationship with a recruitment agency and for avoiding having a frustrating experience:

• Assess the salesperson. The quality of the salesperson is more important than which agency they’re with. Look at their LinkedIn profile to check their experience in the industry. If you like them, make sure that you’ll be dealing with them through the entire recruitment process.
• Make sure the agency understands your company. The agency is representing you, so make sure that their conduct reflects well on you and that they’re communicating accurately and honestly to jobseekers about your job and company. The salesperson should properly get to know your organisation by visiting your offices, not just talking to you over the phone. You could also ask interviewees whether they were happy with the agency.
• Don’t hire agencies who are contractually constrained. Avoid agencies with sector specialisms who might be contractually unable to talk to staff working for competitors. But also make sure that they won’t try to poach your own staff!
• Talk to recent customers. Don’t work with the agency if they’re reluctant to facilitate this.
• Help the agency get to know what you want. Give them your Great Performance Profile and the screening questions which you want them to use. Give them clear feedback on the people they send you. If they don’t engage on these, then go elsewhere.
• Understand that industry accreditation doesn’t mean quality. It’s easy to become a member of an industry body and I’ve never seen standards enforced.
• Negotiate – but prudently. Agencies often charge a lot, so negotiate and try to get a good deal. But strike a balance here: agencies send their best applicants to their best (i.e. highest paying) customers and especially if you’re a new customer a reduced price might mean reduced service. One good tactic is to first negotiate a longer guarantee period and when you’re a more established customer try to get a fee discount.

<div class="grey-callout"><h2>Key Takeaways</h2><p><ul><li>Don’t rush to use recruitment agencies for all recruitment needs. Recruitment agencies can be expensive and unscrupulous, so beware!</li><li>Use them if your need is urgent, you’re trying to fill a sensitive, confidential or unusual role, you’re entering an international market or you need political cover in the case of a delicate recruitment situation.</li><li>Competition for fees may lead to you being sent unsuitable applicants.</li><li>Guarantees don’t fully offset your risks, but cash refunds are the best type.</li><li>Follow my tips for getting the best experience with recruitment agencies, including: find a salesperson you’re happy with who’ll manage the whole process, make sure that the agency understands your company, let them know what you want, negotiate prudently.</li></ul></p></div>